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Why You Must Choose An Endowment Plan For Your Retirement?

Published On Oct 04, 2021 11:00 AM By InsuranceDekho

In simple terms, Endowment plans imply that you begin saving (investing) money on a regular basis for future financial requirements, with the added benefit of life risk coverage, which provides financial support to your family if you are unable to do so.

When a person's income is consistent, an Endowment plan should be purchased. You can steadily expand your wealth by putting aside a percentage of your regular income as a premium. These policies are long-term in nature, and the longer the policy duration, the greater the benefit. Because it provides both safety and wealth building, an Endowment plan is the greatest option for your retirement. It's not just a form of protection, but also a form of investment. If you die, you will receive a lump-sum payment, and if you live past the insurance period, you will receive a lump-sum payment. Endowment plans are low-risk (nearly risk-free) investments for your well-diversified portfolio.

When your principal source of income stops when you retire, a fund like this will allow you to enjoy your well-earned retirement safely. You may continue to live independently and preserve your way of life without fear or anxiety. You would never want to save money or deny yourself the opportunity to pursue your dreams. An Endowment plan can help you achieve your goals, whether it's taking your spouse on a global trip or purchasing your ideal home in a hill station after you retire.

Why You Must Choose An Endowment Plan For Your Retirement?

Below are a few reasons why you must choose an Endowment Plan for your retirement:

Must Read: Know How Endowment Policy Is A Risk-Free Investment Tool?

1. Tax Benefits

One of the most significant advantages of purchasing an Endowment policy is that you will receive a tax benefit on both your premium and your final withdrawals after maturity. Premature withdrawals from any savings plan, including a normal Endowment fund, are subject to a penalty under Sections 80C and 10(10D) of the Income Tax Act of 1961.

2. Maturity Benefits

The insurance company will give you a monetary lump sum called a maturity bonus when your policy reaches its expiration date. Each sort of Endowment policy has its own maturity date. This is only achievable if the assured has paid his or her monthly or annual premiums on schedule. The assured individual can use the maturity payout (or Endowment) to live well in their retirement years without having to rely on family.

Please keep in mind that if the policyholder passes away within the payment schedule, the money promised will be paid to their nominees.

3. Lump-Sum Payment

The lump-sum varies significantly depending on the investment plans purchased from a life insurance company. The maturity span varies as well, ranging from 10 to 15 to 20 or more years. Because the amount accrued during the policy increases as the maturity time lengthens, the monetary advantage increases. Please keep in mind that your premium size, in addition to the policy term, has a significant impact on the sum assured.

4. Guaranteed Income

Endowment insurance provides you with a stream of income during your retirement years. In most situations, you will receive a lump sum Endowment, or if you have chosen a guaranteed income plan, you will receive a guaranteed source of regular income as maturity benefits. This will assist you in meeting your medical and other ongoing expenses.

It will assist you in securing the future of your children, particularly if you are unable to do so. If you, the policyholder, dies, your Endowment fund is transferred to your beneficiaries.


It's a good idea to save for retirement by investing in an endowment plan. It not only protects you from the unforeseeable and unavoidable future, but it also gives you peace of mind by ensuring that you will receive guaranteed returns.

Before participating in a pension Endowment plan, one should become acquainted with the contract, premium payments, jargon, and their meanings. It is suggested that you seek help from a professional.

Also Read: Endowment Plan - Features and Benefits

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.

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